Bernanke and the Financial "No Fly" List

Threats? We're used to them. Remember Brad Sherman talking about the threat of martial law if TARP did not pass? (oh wait, he's since decided that he's on team Obamacare so let's not give him any free PR, eh?)

Anyway. I'm shaking in my Pumas as we speak! (See also my December 25, 2009 Don't Throw the Fed in the Briar Patch)

Market Ticker brings us right back to the fall of 2008:

Remember this? $125 billion of "slosh", or excess liquidity, drained from the system in the four days from 9/19 - 9/24/2008.

To put this in perspective that was a drain of sixty-five percent of the total excess liquidity in the system - a "starvation diet" if you will - and that withdrawal was an intentional act!

The above is an irrefutable record of what The Fed actually did.

Remember that Bernanke's argument at the time was that the credit markets were suffering from a lack of liquidity. That is, there was no problem with firms actually being bankrupt, but they were illiquid.

If that's true why did Bernanke intentionally drain $125 billion from the system - two thirds of the market's total excess liquidity - instead of adding to it?

The post in question where KD calls out Bernanke for pulling the cash may be found here.

Fitting, as scare tactics are standard remedial political fare, aren't they? Oh look, here are some more threats, this time another "collapse" should Ben Bernanke not be confirmed for a second term as Fed Chairman. Threats eh? Classy.


A defeat of Federal Reserve Chairman Ben Bernanke's quest for another four-year term could raise the risk of a "double dip" recession if political jousting over a successor were to drag on for months, economists warn.

Still, the chance of Bernanke's defeat has unsettled Wall Street, contributing to last week's 4 percent loss by the Dow Jones industrial average, its worst performance in 10 months. If Bernanke were rejected, uncertainty over a successor would further roil global markets, at least in the short run.

Anxiety, along with sagging investments, could cause consumers and businesses to cut spending. Joblessness, already at 10 percent, could worsen. And the recovery might fail.

Economists who fear a double-dip recession - in which the recovery would collapse into another recession - regard it as a worst-case scenario. But they don't rule it out, either.

Oh please, Washington Post, I thought you were better than this. Really? It's the uncertainty of Bernanke's future that caused markets to seize up this past week? Haven't you ever heard of a market correction? Eventually the drunk has to step away from the punch bowl to go throw up on someone's shoes.

The end is nigh!!

(and all the transparent, weak little threats in the world can't change that. So suck it.)

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.


profalbrecht said...

What? This week's market decline is due to uncertainty over Bernanke's reappt? That is as believable as other claims that the decline is due to Mass. Senatorial election results, Edwards confessing paternity, a Tiger sighting in Florida, worry over the NY Jets, and Urban Meyer's announcement that he will coach spring practice.

I am confused. Which is it?

profalbrecht said...

Oh, a market correction? Missed that one.

Prof Albrecht,

As you know, I'm a fairly reasonable person with little tolerance for bullshit. So to hear that they have resorted to threats (a la "OMG! Markets are tanking! QUICK, get Bernanke back in there!!") leads me to believe that the situation is actually scarier than first suspected. They know he has a snowball's chance in hell of getting confirmed or they wouldn't be throwing their best artillery into the fight to keep him.

Sickening but fun to watch regardless.

I use the term "market correction" loosely. This market does not need a correction, it needs cold turkey rehab and several years of therapy IMHO.

WaPo may be right! The financials fell this week more than the rest of the market. So? The market is afraid that Zimbabwe Ben might be replaced with someone less subject to Wall Street control.


OldSouth said...

You know, hubris is an amazing thing. He just doesn't know when to walk away from the roulette wheel.

If I were ZB, I'd want to cash in, retire to somewhere way away from extradition treaties and banking laws, with a whole mess of bullion safely tucked away, and turn the problem over to someone else.

If things work out well, I get a book deal, and can show my face again at dinner in New York. If things go badly, I'll be safely holed up in Paraguay.

Either way, it's someone else's problem.

But, that's just me, and I'm not him...